Interpretive Summary: A major economic challenge to biomass conversion into renewable fuels is the high cost associated with shipping the biomass due to its low bulk density. As such, biorefineries are likely to be built on scales that are about 25 times smaller than fossil fuel processing plants. Several ways of circumventing huge transportation cost have been proposed. One which is particularly attractive is the thermal conversion approach whereby the biomass is thermally degraded in the absence of air or oxygen to produce an energy-dense liquid intermediate (bio-oil) that can be easily shipped for further processing. In this study, we looked at a scenario where several small to medium sized bio-oil production plants are built and distributed around a centralized large plant that accepts bio-oil as feedstock for the production of diesel-like fuels by a process known as gasification and Fischer Tropsch reforming. The economic study shows that distributed processing permits the construction of very large centralized plants that can result in production costs as low as $1.43 at production capacities in excess of 2500 million gallons of gasoline equivalent. However, the capital investment for an optimally sized distributed processing system will be about twice that of the centralized processing facility. The findings are beneficial to individual farmers, farmers’ cooperatives, and investors interested in biomass refineries because it shows that small scale pyrolysis units, operated by farmers or farmer groups could produce bio-oil as a value added product. While the bio-oil would be shipped to a large central refinery for conversion to final transportation fuels, locally owned pyrolysis plants would capture a significant portion of the value chain, leading to more rural income and economic development

Technical Abstract:
Biorefineries are likely to be built with output capacities that are 25 times smaller than fossil fuel refineries due to the high cost of transporting biomass. There are various scenarios that can be employed to reduce biomass transportation costs and allow for lower fuel production costs at higher capacities. This paper examines distributed fast pyrolysis to bio-oil that is subsequently gasified and converted to Fischer-Tropsch diesel at centralized plants as one possible solution to high transportation costs. The study indicates that a centralized gasification plant can produce Fischer-Tropsch diesel from biomass for $1.56 per gallon of gasoline equivalent (gge) in an optimally sized plant of 550 million gge per year. Three distributed processing systems were investigated, one assuming “farm-scale” pyrolyzers each of 5.4 ton per day (tpd) capacity, a second employing 55 tpd “transportable cooperative scale”, and the other one assuming “cooperative scale” pyrolyzers each of 550 tpd. Distributed processing permits the construction of very large centralized plants that accept bio-oil for catalytic upgrading to transportation fuels, achieving costs as low as $1.43 for production capacities in excess of 2500 million gge. Total capital investment for this optimally sized distributed processing system will be $4 billion compared to only $1.6 billion for the centralized processing facility.